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Exhibit 2
EXECUTION VERSION
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SHARE PURCHASE AGREEMENT
By and Among
THE XXXXXX & SESSIONS CO.,
PYRAMID INDUSTRIES, INC.
And
THE SHAREHOLDERS
LISTED ON EXHIBIT A TO THIS AGREEMENT
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Dated as of August 20, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF SHARES...............................................................................1
1.1 Purchase and Sale of Shares......................................................................1
1.2 Purchase Price...................................................................................1
ARTICLE II
CLOSING...................................................................................................2
2.1 Place and Time of Closing........................................................................2
2.2 Deliveries by the Shareholders...................................................................3
2.3 Deliveries by Buyer..............................................................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS........................................................4
3.1 Share Ownership..................................................................................4
3.2 Power and Authority..............................................................................4
3.3 Validity of Agreement............................................................................4
3.4 No Breach........................................................................................4
3.5 Buyer's Ownership................................................................................5
3.6 No Shareholder Transactions......................................................................5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................................5
4.1 Organization and Standing; Power and Authority...................................................5
4.2 Validity of Agreement............................................................................5
4.3 Capitalization of the Company and VisionTeq......................................................6
4.4 Articles and By-Laws.............................................................................6
4.5 No Breach........................................................................................6
4.6 No Consents Necessary............................................................................6
4.7 Financial Statements.............................................................................7
4.8 Changes in Circumstances.........................................................................7
4.9 Title to and Condition of Real Property..........................................................7
4.10 Books and Records................................................................................8
4.11 Contracts........................................................................................8
4.12 Compliance with Laws.............................................................................9
4.13 Taxes............................................................................................9
4.14 Bank Accounts; Powers of Attorney...............................................................10
4.15 Insurance.......................................................................................10
4.16 Intellectual Property...........................................................................11
4.17 Permits.........................................................................................12
4.18 Employee Benefit Matters........................................................................12
4.19 Employee Relations; Collective Bargaining Agreements............................................14
4.20 Employee Matters................................................................................15
4.21 Environmental Matters...........................................................................15
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4.22 Litigation......................................................................................16
4.23 Accounts Receivable; Inventory..................................................................16
4.24 Product Warranty and Product Liability..........................................................17
4.25 Customers and Suppliers.........................................................................17
4.26 Absence of Certain Commercial Practices.........................................................17
4.27 Indebtedness....................................................................................17
4.28 Title to and Sufficiency of Assets..............................................................17
4.29 Business........................................................................................17
4.30 Budget..........................................................................................18
4.31 Brokers, Finders and Agents.....................................................................18
4.32 Disclosure......................................................................................18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER..................................................................18
5.1 Organization and Standing; Corporate Power Authority............................................18
5.2 No Breach.......................................................................................18
5.3 Brokers, Finders and Agents.....................................................................19
5.4 Investment Intent...............................................................................19
ARTICLE VI
COVENANTS................................................................................................19
6.1 Reasonable Access...............................................................................19
6.2 Conduct of Business of the Company..............................................................19
6.3 No Solicitation of Offers.......................................................................20
6.4 Filings; Other Actions..........................................................................21
6.5 Publicity.......................................................................................21
6.6 Satisfaction of Closing Conditions..............................................................21
6.7 No Transfers of Shares..........................................................................21
6.8 Notice of Certain Events........................................................................21
6.9 Tax Matters.....................................................................................22
6.10 Insurance Claim.................................................................................22
ARTICLE VII
CONDITIONS TO CLOSING....................................................................................22
7.1 Conditions to Obligations of the Company, the Shareholders and Buyer............................22
7.2 Conditions to Obligations of Buyer..............................................................23
7.3 Conditions to Obligations of the Company and the Shareholders...................................23
ARTICLE VIII
INDEMNIFICATION, REMEDIES AND SURVIVAL...................................................................24
8.1 Indemnification by the Shareholders.............................................................24
8.2 Buyer's Other Post-Closing Remedies.............................................................24
8.3 Indemnification by Buyer........................................................................24
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8.4 Direct Claims...................................................................................25
8.5 Third Person Claims.............................................................................25
8.6 Limitations; Survival...........................................................................26
8.7 Tax Indemnity...................................................................................27
8.8 Process for Recovery From the Escrow Amount by Buyer Indemnified Parties........................27
8.9 Shareholders' Representative....................................................................27
ARTICLE IX
TERMINATION OF AGREEMENT.................................................................................28
9.1 Termination.....................................................................................28
9.2 Effect of Termination...........................................................................29
ARTICLE X
DEFINITIONS..............................................................................................29
ARTICLE XI
MISCELLANEOUS............................................................................................33
11.1 Further Assurances..............................................................................33
11.2 Notices.........................................................................................34
11.3 Binding Effect; Assignment......................................................................36
11.4 Entire Agreement................................................................................37
11.5 Governing Law; Construction.....................................................................37
11.6 No Third Party Rights...........................................................................37
11.7 Amendment.......................................................................................37
11.8 Waivers.........................................................................................37
11.9 Fees and Expenses of Transaction................................................................37
11.10 Counterparts....................................................................................37
11.11 Severability....................................................................................38
11.12 Consent to Jurisdiction.........................................................................38
11.13 Arbitration.....................................................................................38
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EXHIBITS AND SCHEDULES
Exhibits
EXHIBIT A - Shareholders
EXHIBIT B - Escrow Agreement
EXHIBIT C - Legal Opinion of XxxXxxxxx Xxxxx
Schedules
SCHEDULE 3.1 - Share Ownership
SCHEDULE 3.6 - Shareholder Transactions
SCHEDULE 4.1 - Locations
SCHEDULE 4.3 - Shares of the Company
SCHEDULE 4.5 - No Breach
SCHEDULE 4.6 - No Consents Necessary
SCHEDULE 4.7(a) - Financial Statements
SCHEDULE 4.8 - Changes in Circumstances
SCHEDULE 4.9 - Real Property: Ownership and Leases
SCHEDULE 4.11 - Contracts
SCHEDULE 4.12 - Compliance with Laws
SCHEDULE 4.13 - Taxes and Audits
SCHEDULE 4.14 - Bank Accounts; Powers of Attorney
SCHEDULE 4.15 - Insurance
SCHEDULE 4.16 - Intellectual Property
SCHEDULE 4.17 - Permits
SCHEDULE 4.18 - Employee Benefit Matters
SCHEDULE 4.19 - Collective Bargaining Agreements and Union Contracts
SCHEDULE 4.20 - Employee Matters
SCHEDULE 4.21 - Environmental Matters
SCHEDULE 4.22 - Litigation Matters
SCHEDULE 4.24 - Product Liability Claims
SCHEDULE 4.25 - Customers and Suppliers
SCHEDULE 4.27 - Indebtedness
SCHEDULE 4.28 - Liens on Assets
SCHEDULE 4.29 - Budget
SCHEDULE 4.30 - Projections
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SHARE PURCHASE AGREEMENT
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THIS SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of August 20, 2000, by and among THE XXXXXX & SESSIONS CO., an
Ohio corporation (the "BUYER"), PYRAMID INDUSTRIES, INC., a Pennsylvania
corporation (the "COMPANY"), and all of the Shareholders of the Company listed
on EXHIBIT A (collectively, the "SHAREHOLDERS").
RECITALS
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A. The Shareholders of the Company are the beneficial and
record owners of all the issued and outstanding shares of capital stock of the
Company (the "SHARES").
B. The Shareholders desire to sell to Buyer, and Buyer desires
to purchase from the Shareholders, all of the Shares upon the terms and
conditions set forth in this Agreement.
STATEMENT OF AGREEMENT
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In consideration of the respective agreements, covenants,
representations and warranties contained in this Agreement, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
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1.1 PURCHASE AND SALE OF SHARES. Subject to the terms and
conditions of this Agreement, at the Closing (i) the Shareholders shall sell the
Shares to Buyer, free and clear of all Liens, (ii) each Shareholder shall
deliver to Buyer one or more stock certificates representing the Shares owned by
that Shareholder, with duly executed stock powers attached, in proper form for
transfer, (iii) Buyer shall purchase the Shares and (iv) Buyer shall pay the
Purchase Price for the Shares.
1.2 PURCHASE PRICE.
(a) In full consideration for the Shares, at the Closing,
Buyer shall wire transfer in immediately available funds an aggregate amount in
cash equal to $45,400,000 plus any amount payable under Section 6.10 of this
Agreement (the "PURCHASE PRICE"), minus (i) the amount held in the account of
XxxXxxxxx Xxxxx Xxxxx & Xxxxxxx LLP ("XXXXXXXXX XXXXX") at the First National
Bank of Pennsylvania, pursuant to the terms of the letter dated May 17, 2000
from XxxXxxxxx Xxxxx to Buyer and (ii) the amount paid to the Escrow Agent
pursuant to Section 1.2(b). The Purchase Price shall be paid to an account
established by the Shareholders' Representative for purposes of receiving,
allocating and distributing the Purchase Price to the Shareholders, which
account shall require the signature of both members of the Shareholders'
Representative in order to cause any disbursements from such account.
(b) At the Closing, Buyer shall pay $4,500,000 (the "ESCROW
AMOUNT") to an escrow agent to be mutually agreed upon by the Buyer and the
Company (the "ESCROW AGENT")
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to be held and administered by the Escrow Agent pursuant to the terms of the
Escrow Agreement, in the form attached as EXHIBIT B (the "ESCROW AGREEMENT").
1.3 ADJUSTMENT TO PURCHASE PRICE.
(a) Within 30 days after the Closing, Buyer, at its option,
shall prepare and deliver to the Shareholders' Representative a statement (the
"NET WORTH STATEMENT"), based on the Company's balance sheet as of the Closing
Date, setting forth the amount of the net worth of the Company as of the Closing
Date (the "NET WORTH"). The Net Worth Statement shall be prepared in accordance
with generally accepted accounting principles and in a manner consistent with
the 1999 Balance Sheet. Notwithstanding the foregoing, any obligations of the
Company for transaction expenses permitted to be paid by the Company under
Section 11.9 of this Agreement shall not be treated as a liability of the
Company for purposes of determining Net Worth.
(b) Within 30 days following receipt by the Shareholders'
Representative of the Net Worth Statement, the Shareholders' Representative
shall notify Buyer of any dispute it has with respect to the preparation or
content of the Net Worth Statement. In the event of such notification of
dispute, the Shareholders' Representative and Buyer shall negotiate in good
faith to resolve such dispute. If Buyer and the Shareholders' Representative are
unable to resolve such dispute within 30 calendar days after the commencement of
such dispute, a firm of independent certified public accountants of national
reputation mutually acceptable to Buyer and the Shareholders' Representative
(the "ACCOUNTING FIRM"), shall be retained to resolve such dispute. If Buyer and
the Shareholders' Representative fail to agree on an Accounting Firm within a
period of ten calendar days, the determination of the Accounting Firm shall be
in accordance with Section 11.13. All determinations made by the Accounting Firm
shall be final, conclusive and binding on the parties. Buyer and the
Shareholders shall share equally the fees and expenses of the Accounting Firm.
(c) If, upon the completion of the Net Worth Statement and the
final resolution of any disputes pertaining thereto as provided in Section
1.3(b), Net Worth is less than $8,100,000, the Shareholders shall refund to the
Buyer, payable out of the Escrow Amount, an amount in cash equal to such
deficiency.
(d) If, upon the completion of the Net Worth Statement and the
final resolution of any disputes pertaining thereto as provided in Section
1.3(b) hereof, Net Worth is equal to or greater than $8,100,000 or in the event
Buyer elects not to prepare the Net Worth Statement, none of the parties shall
owe any amount to any of the other parties under this Section 1.3.
ARTICLE II
CLOSING
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2.1 PLACE AND TIME OF CLOSING. The closing of the purchase and
sale of the Shares (the "CLOSING") shall take place at Xxxxx, Day, Xxxxxx &
Xxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, on the third business day after
each of the conditions set forth in Article VII that must be satisfied before
the Closing have been satisfied or waived or at such other place,
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date and time as the parties may agree in writing (such date being referred to
as the "CLOSING DATE").
2.2 DELIVERIES BY THE SHAREHOLDERS. At the Closing, the
Shareholders shall deliver, or cause the Company to deliver, to Buyer:
(a) stock certificates representing the Shares, accompanied by
duly executed stock powers, in form and substance reasonably satisfactory to
Buyer;
(b) true, correct and complete minute books, stock ledgers and
transfer books of the Company, all fully updated to the satisfaction of Buyer;
(c) a certificate of an officer of the Company to the effect
that the conditions set forth in Sections 7.2(a) and 7.2(b) have been satisfied;
(d) a certificate of the Secretary of the Company, in form and
substance reasonably satisfactory to Buyer, certifying as to (i) the resolutions
of the directors approving and authorizing this Agreement and the transactions
contemplated by this Agreement and (ii) the By-laws of the Company;
(e) a good standing certificate of the Company issued by the
Secretary of State of the Commonwealth of Pennsylvania and each state where it
is qualified to do business as a foreign corporation;
(f) the Articles of Incorporation of the Company, certified by
the Secretary of State of the Commonwealth of Pennsylvania;
(g) a no lien letter from the Commonwealth of Pennsylvania and
a tax certificate in each state where it is qualified to do business as a
foreign corporation;
(h) a good standing certificate of VisionTeq, Inc., a Florida
corporation ("VisionTeq"), issued by the Secretary of State of the State of
Florida and each state where it is qualified to do business as a foreign
corporation;
(i) the Articles of Incorporation of VisionTeq, certified by
the Secretary of State of the State of Florida;
(j) tax certificates showing that VisionTeq has paid its
franchise taxes in the State of Florida and in each state where it is qualified
to do business as a foreign corporation;
(k) the legal opinion of Xxxxxxxx Xxxxxxxxx Professional
Corporation, in the form attached as EXHIBIT C;
(l) the Escrow Agreement;
(m) a payoff letter from PNC Bank and associated UCC
termination statements;
(n) landlord lien waivers for each of the properties leased by
the Company and any other similar documentation reasonably requested by the
Buyer in order to satisfy its lenders;
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(o) consent of the minority shareholders of VisionTeq pursuant
to Section 1.1 of the Shareholder Agreement, by and among VisionTeq and the
shareholders of VisionTeq, dated as of June 23, 1999; and
(p) the legal opinion of counsel to Shareholders who are not
natural persons, in a form reasonably satisfactory to Buyer and counsel to such
Shareholder.
2.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver
to the Shareholders:
(a) the Purchase Price;
(b) a certificate of an officer of Buyer to the effect that
the conditions set forth in Sections 7.3(a) and 7.3(b) have been satisfied; and
(c) the Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
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Each of the Shareholders represents and warrants to Buyer:
3.1 SHARE OWNERSHIP. Such Shareholder owns beneficially and of
record, free and clear of any Liens, the Shares set forth opposite such
Shareholder's name on SCHEDULE 3.1, or in the case of any members of the Xxxxx
family or Xxxxx Holdings, LLC, as otherwise provided on such Schedule.
3.2 POWER AND AUTHORITY. Such Shareholder has the full
capacity and right to execute, deliver and perform his, hers or its obligations
under this Agreement. At the Closing, such Shareholder will have the capacity
and right to sell, assign, transfer and deliver to Buyer the Shares set forth
opposite his or her name on SCHEDULE 3.1.
3.3 VALIDITY OF AGREEMENT. This Agreement has been duly
executed and delivered by such Shareholder and constitutes the valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms.
3.4 NO BREACH. Neither the execution and delivery of, the
performance by such Shareholder of his, hers or its obligations under this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, will (a) violate, conflict with or result in the breach of, any
applicable Law or Order, (b) result in the creation of any Lien upon the Shares
or (c) violate, conflict with, result in the breach of or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, accelerate or permit the acceleration of the performance
required by, or otherwise give any Person additional rights or compensation
under, any note, deed, lease, instrument, security agreement or mortgage, any
commitment, Contract, license, sales commitment or other instrument or oral
understanding to which such Shareholder is a party or by which the Shares held
by such Shareholder are bound.
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3.5 BUYER'S OWNERSHIP. Upon payment of the Purchase Price,
Buyer will acquire legal and beneficial ownership of the Shares held by such
Shareholder, free and clear of any Lien.
3.6 NO SHAREHOLDER TRANSACTIONS. EXCEPT AS SET FORTH ON
SCHEDULE 3.6, such Shareholder does not have any interest (other than as a
non-controlling holder of securities of a publicly-traded company), either
directly or indirectly, in any Person (whether as an employee, officer,
director, shareholder, agent, independent contractor, security holder, creditor,
consultant or otherwise) that presently (i) provides any services or designs,
produces and/or sells any products or product lines, or engages in any activity
which is the same, similar to or competitive with the Business or any activity
in which the Company is now engaged, (ii) is a supplier of, creditor of, or has
an existing contractual relationship with, the Company or (iii) has any direct
or indirect interest in any asset or property used by the Company or any
property, real or personal, tangible or intangible, that is necessary or
desirable for the conduct of the business of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Each of the Shareholders and the Company represents and
warrants to Buyer as follows:
4.1 ORGANIZATION AND STANDING; POWER AND AUTHORITY. The
Company is a corporation duly organized, validly existing and in good standing
under the Laws of the Commonwealth of Pennsylvania, and has full corporate power
and authority to operate and carry on its business, as now being conducted.
VisionTeq is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Florida, and has full corporate power and
authority to operate and carry on its business, as now being conducted. The
Company has the full corporate power and authority to make and perform this
Agreement, and the transactions and other agreements and instruments
contemplated by this Agreement. Except as set forth on SCHEDULE 4.1, since
January 1989, the Company has no Subsidiaries and does not own any interest,
direct or indirect, in any other business enterprise, firm or corporation. The
Company is the only business enterprise, firm or corporation through which its
business is conducted, or which owns, leases or uses assets related to its
business. The Company is not a successor to any other corporation, partnership
or other entity and has never operated as a Subsidiary or a division of any
other Person. SCHEDULE 4.1 sets forth each location in which each of the Company
and VisionTeq maintains an office, has employees, conducts business or owns or
leases property. The Company is qualified to do business and in good standing in
Pennsylvania and Arkansas and VisionTeq is qualified to do business and in good
standing in Florida and Pennsylvania.
4.2 VALIDITY OF AGREEMENT. This Agreement and all other
agreements and instruments executed and delivered or to be executed and
delivered by the Company in connection with this Agreement have been, or upon
execution thereof will be, duly executed and delivered by a duly authorized
officer or representative of the Company and each constitutes the valid and
binding obligations of the Company, enforceable against the Company in
accordance
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with its terms. This Agreement and the performance by the Company of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company.
4.3 CAPITALIZATION OF THE COMPANY AND VISIONTEQ. (a) The
authorized capital stock of the Company consists of (i) 100,000 common shares,
no par value, of which 7,748 shares are issued and outstanding, (ii) 50,000
non-voting common shares, no par value, of which 416 shares are issued and
outstanding and (iii) 50,000 preferred shares, no par value, of which none are
issued and outstanding. Except as set forth on SCHEDULE 4.3, (i) no shares of
the capital stock of the Company have been redeemed or repurchased by the
Company, and (ii) the Shares have been duly authorized and validly issued and
are fully paid and nonassessable. There are no outstanding Options obligating
the Company to issue, directly or indirectly, any additional shares of its
capital stock or other equity securities.
(b) The authorized capital stock of VisionTeq consists of
100,000 shares, $1.00 par value per share, of which 1,000 shares are issued and
outstanding. The Company owns 700 of the outstanding shares of VisionTeq. The
outstanding shares of VisionTeq have been duly authorized and validly issued and
are fully paid and non-assessable.
4.4 ARTICLES AND BY-LAWS. (a) The Articles of Incorporation of
the Company, certified by the Secretary of State of Pennsylvania, and the
By-laws of the Company, certified by the Secretary of the Company and previously
delivered to Buyer by the Company, are true and complete.
(a) The Articles of Incorporation of VisionTeq, certified by
the Secretary of State of Florida, and the By-laws of VisionTeq, certified by
the Secretary of VisionTeq and previously delivered to Buyer by the Company, are
true and complete.
4.5 NO BREACH. Except as set forth on SCHEDULE 4.5, neither
the execution and delivery of, nor the performance by the Company of its
obligations under this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate, conflict with or result in the breach of,
any applicable Law or Order, or the Articles of Incorporation or By-laws of the
Company or VisionTeq, (b) result in the creation of any Lien upon the Shares or
any of the assets or properties of the Company or VisionTeq, or (c) violate,
conflict with, result in the breach of or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or accelerate or permit the acceleration of the performance required by, or
otherwise give any Person additional rights or compensation under, any note,
deed, lease, instrument, security agreement or mortgage, any commitment,
Contract, license, sales commitment or other instrument or oral understanding to
which either the Company or VisionTeq is a party or by which any of their
respective assets or properties are bound.
4.6 NO CONSENTS NECESSARY. Except as set forth on SCHEDULE
4.6, no Consent is required to be obtained from, made with or given to any
Person by the Company in connection with the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated by this
Agreement.
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4.7 FINANCIAL STATEMENTS.
(a) SCHEDULE 4.7(a) includes true and complete copies of (i)
the audited balance sheets of the Company as of December 31, 1999, 1998 and 1997
(the "Balance Sheets") and the related statements of income, stockholders'
equity and cash flows for the twelve-month periods then-ended, including the
notes thereto, together with the reports of the Company's accountants thereon
(together with the Balance Sheets, the "AUDITED FINANCIAL STATEMENTS") and (ii)
the interim unaudited balance sheet as of June 30, 2000 and the related
statements of income, stockholders' equity and cash flows for the six-month
period then ended (the "INTERIM COMPANY FINANCIAL STATEMENTS" and together with
the Audited Financial Statements, the "FINANCIAL STATEMENTS").
(b) The Financial Statements were prepared from the books and
records kept by the Company and present fairly in all material respects the
financial position of the Company as of the dates of each of the Financial
Statements, and the results of its operations for the periods then ended in
accordance with GAAP, except that the last installment of the special bonus
payment to Xxxx X. Xxxxxx has not been accrued in accordance with GAAP. The
reserves on the Balance Sheets of the Company included in the Financial
Statements have been calculated in good faith in a manner consistent with past
practice. Except as set forth on SCHEDULE 4.7(a) or as incurred since June 30,
2000 in the ordinary course of business, the Company has no Indebtedness,
liabilities or obligations of any nature whatsoever, whether absolute, accrued,
contingent or otherwise, whether or not such liabilities would be required to be
reflected on a balance sheet of the Company as of the date of this Agreement.
(c) Calculations showing the pro forma adjustments to the
pre-tax income of the Company for 1999 have previously been delivered to Buyer.
For each item set forth in such calculations,, the dollar amounts are the same
dollar amounts used in the Audited Financial Statements for 1999.
4.8 CHANGES IN CIRCUMSTANCES. Except as set forth on SCHEDULE
4.8, since December 31, 1999, neither the Company nor VisionTeq has (i) sold,
transferred, or otherwise disposed of any of its material properties or assets
outside the ordinary course of its business, (ii) mortgaged, pledged or
subjected to any Lien any of its material properties or assets, (iii) acquired
any material properties or assets outside the ordinary course of its business,
(iv) declared or paid any dividend or made any other distribution to its
shareholders or repurchased any of its outstanding capital stock, (v) entered
into any transaction or otherwise conducted any business other than transactions
in the ordinary course of its business, (vi) modified, amended, canceled, or
terminated any Contracts listed or which would be required to be listed on
SCHEDULE 4.11 hereto under circumstances which could reasonably be anticipated
to have a Material Adverse Effect, (vii) made any loan or advance to any
Affiliate of the Company or VisionTeq, other than customary advances for
business expenses, (viii) suffered any change in its assets, properties,
financial condition, results of operations or business which would constitute a
Material Adverse Effect, (ix) sustained any material damage, loss, or
destruction of or to any of its assets or properties (whether or not covered by
insurance), (x) experienced any material labor trouble or any material change in
its personnel or (xi) agreed to or obligated itself to take any of the actions
identified in clauses (i) through (vii) above.
4.9 TITLE TO AND CONDITION OF REAL PROPERTY. SCHEDULE 4.9
constitutes a complete list of all real properties owned or leased by the
Company or VisionTeq. The
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Company has delivered or caused to be delivered true and complete copies of all
documents evidencing the ownership or the lease of the owned or leased
properties set forth on SCHEDULE 4.9. The Company or VisionTeq has valid and
enforceable leasehold interests in, all of the real properties, free and clear
of all Liens. Except as set forth on SCHEDULE 4.9, neither the Company nor
VisionTeq is, and, to the Knowledge of the Company, no other party is, in
default under any lease listed on SCHEDULE 4.9, and there exists no event which,
with or without notice or the lapse of time, or both, would constitute a default
by the Company or VisionTeq or, to the Knowledge of the Company, any other
party, under any lease listed on SCHEDULE 4.9. Any lease under which either the
Company or VisionTeq is a party and the other party to such lease is an entity
in which a Shareholder has an interest is at prevailing market rates.
4.10 BOOKS AND RECORDS. To the Knowledge of the Company, the
minute books of each of the Company and VisionTeq that have been made available
to Buyer for its inspection contain accurate and complete records of all
meetings of and corporate actions or written consents by the Shareholders and
Board of Directors (and all committees thereof) of the Company and the
shareholders and Board of Directors (and all committees thereof) of VisionTeq.
The stock ledgers of the Company and VisionTeq made available to Buyer for its
inspection is complete and accurately reflects all issuances, transfers,
repurchases and cancellations of shares of capital stock of each of the Company
and VisionTeq.
4.11 CONTRACTS. SCHEDULE 4.11 hereto sets forth each Contract
to which the Company or VisionTeq is a party or other instrument that is of a
type described below:
(a) Any material Contract with any representative, distributor
or sales agent which is not terminable without cost or penalty to the Company or
VisionTeq on 60 days' or less notice;
(b) Any material Contract with any Governmental Authority;
(c) Any Contract involving payments or receipts in excess of
$10,000;
(d) Any Contract containing a covenant not to compete or
restricting in any material respect the ability of the Company or VisionTeq to
transact business in any jurisdiction of the United States or a foreign country;
(e) Any material Contracts or other agreements for
indemnification;
(f) Any Contract with any Affiliate of the Company or
VisionTeq;
(g) Any indenture, mortgage, loan or credit Contract under
which the Company or VisionTeq has borrowed any money or issued any note, bond,
indenture or other evidence of Indebtedness, or guaranteed Indebtedness borrowed
by others; and
(h) Any other Contract material to the assets, properties,
financial condition, results of operations or business of the Company or
VisionTeq.
Except as expressly set forth on SCHEDULE 4.11, each Contract
listed or described on SCHEDULE 4.11 (or required to be so listed or described)
is a valid and binding obligation of the Company or VisionTeq and is in full
force and effect. Except as expressly set forth on SCHEDULE
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4.11, the Company or VisionTeq has performed all of its material obligations
required to be performed though the date of this Agreement under the Contracts
so listed or described and neither the Company nor VisionTeq is in breach or
default in any material respect thereunder nor has any event or circumstance
occurred which, with notice or lapse of time or both, would constitute any such
material breach or default. Neither the Company nor VisionTeq is a party to any
Contract where either the Company or VisionTeq would reasonably expect to incur
a loss with respect to such Contract. To the Knowledge of the Company, none of
the other parties to such Contracts is in breach or default in any respect
thereunder nor has any event or circumstance occurred which, with notice or
lapse of time or both, would constitute any such breach or default, except in
any such case for such breaches or defaults which would not have a Material
Adverse Effect.
4.12 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE
4.12, to the Knowledge of the Company, each of the Company and VisionTeq is
currently in compliance with all applicable Laws, and no expenditures are
presently anticipated to be required to comply with any such Law. Neither the
Company nor VisionTeq is in material default under, and to the Knowledge of the
Company, no event has occurred which, with the lapse of time or action by a
third party, could result in default under, the terms of any Laws.
4.13 TAXES.
(a) TAX RETURNS. Except as set forth on SCHEDULE 4.13, each of
the Company and VisionTeq has prepared in good faith and duly and timely filed,
or caused to be duly and timely filed, all federal, state, foreign and local Tax
Returns and reports required to be filed by it. The Tax Returns are true and
correct in all material respects. The Company has paid, or has made reasonable
provision or set up an adequate accrual or reserve (in each case as reflected on
the Financial Statements) for the payment of, all Taxes due with respect to all
periods covered by such Tax Returns. The provision for Taxes shown on the
Financial Statements is sufficient to cover all known liabilities or obligations
of the Company for Taxes (including, without limitation, interest through the
date of the Financial Statements and any additions to taxes or penalties) that
may be due in respect of periods through the date of such Financial Statements
for which returns and reports as of such date are not yet due. Neither the
Company nor VisionTeq is a party to any Action, nor to the Knowledge of the
Company is any such Action threatened, by any Governmental Authority for the
assessment or collection of any Taxes, and no deficiency notices or reports have
been received by the Company or VisionTeq in respect of any deficiencies for any
Taxes. The Company has not elected pursuant to the Code, to be treated as a
Subchapter S corporation or collapsible corporation pursuant to Section 341(f)
or Section 1362(a) of the Code, nor has it made any other elections pursuant to
the Code which would have a Material Adverse Effect on the Company, its
financial condition, its business as presently conducted or proposed to be
conducted immediately after the Closing or any of its properties or material
assets.
(b) AUDITS. Except as set forth on SCHEDULE 4.13, no Tax
Return filed by or on behalf of the Company or VisionTeq has been, or is
currently being, audited or examined by any Taxing Authority, and there are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any Tax Return filed by the Company or VisionTeq. There are no
claims pending against the Company or VisionTeq for past due Taxes, and, to the
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Knowledge of the Company, there are no threatened claims and there are no
matters under discussion with any Taxing Authority with respect to any
additional Taxes.
(c) PARACHUTE PAYMENTS. Neither the Company nor VisionTeq is a
party to any oral or written Contract under which any Person may receive
payments from any Person characterized as "excess parachute payments" within the
meaning of section 280G(b) of the Code.
(d) TAX SHARING AGREEMENTS. Neither the Company nor VisionTeq
is a party to any oral or written Contract under which either (i) the Company or
VisionTeq may be obligated to pay certain Tax liabilities of any Person or (ii)
any Person may be obligated to pay certain Tax liabilities of the Company or
VisionTeq.
(e) CURRENT PERIOD TAXES. Each estimated payment for Current
Period Taxes payable by the Company or VisionTeq has been made on or before the
date on which the payment is required under applicable Law to be made in an
amount sufficient to avoid the imposition of a penalty.
(f) WITHHOLDINGS. All Taxes which the Company or VisionTeq is
or has been required by Law to withhold or to collect have been duly withheld
and collected, and have been timely paid to the proper Governmental Authority or
are properly held by the Company or VisionTeq for such payment.
(g) CHANGES IN METHODS OF ACCOUNTING. Except as set forth on
SCHEDULE 4.13, the IRS has not successfully invoked, nor could it successfully
invoke, section 481 of the Code with respect to any method of accounting of the
Company or VisionTeq.
4.14 BANK ACCOUNTS; POWERS OF ATTORNEY. Set forth on SCHEDULE
4.14 is an accurate and complete list showing (i) the name and address of each
bank in which the Company or VisionTeq has an account or safe deposit box, the
number of any such account or any such box and the names of all Persons
authorized to draw thereon or to have access thereto, and (ii) the names of all
Persons, if any, holding powers of attorney from the Company or VisionTeq and a
summary statement of the terms thereof.
4.15 INSURANCE. Each of the Company and VisionTeq has
insurance policies in full force and effect. SCHEDULE 4.15 lists all insurance
policies maintained by the Company or VisionTeq or under which the Company or
VisionTeq is covered in respect of its properties, assets, business or personnel
as of the date of this Agreement. Each policy is in full force and effect and
will remain in full force and effect through the Closing. Except as set forth on
SCHEDULE 4.15, to the Knowledge of the Company, no event relating to the
Company, VisionTeq or the Business has occurred which can reasonably be expected
to result in a retroactive adjustment in premiums under any such insurance
policies or which is likely to result in a material prospective upward
adjustment in such premiums. Excluding insurance policies that have expired and
been replaced in the ordinary course of business, no insurance policy has been
canceled within the last two years and, to the Knowledge of the Company, no
threat has been made to cancel any insurance policy of the Company or VisionTeq
during such period. To the Knowledge of the Company, no event has occurred,
including, without limitation, the failure by the Company or VisionTeq to give
any notice or information or the Company or VisionTeq
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giving any inaccurate or erroneous notice or information, which limits or
impairs the rights of the Company or VisionTeq under any such insurance
policies.
4.16 INTELLECTUAL PROPERTY.
(a) "INTELLECTUAL PROPERTY" shall mean (i) patents, patent
applications, patent disclosures and the ideas, inventions and improvements
thereto and all reissues, continuations, continuations-in-part, divisions and
reexaminations thereof, (ii) trademarks, service marks, trade names, trade
dress, logos and registrations and applications for registrations thereof, and
all renewals and extensions thereof, (iii) copyrights and maskworks, and all
registrations and applications for registration thereof, (iv) computer software,
data, data bases, and user documentation and audio-visual and text materials,
(v) all trade secret and confidential information (including, but not limited
to, manufacturing processes research and development materials, know-how,
drawings and designs, technical data, marketing financial and business plans,
and customer lists), (vi) advertising materials utilized by Company or VisionTeq
and (vii) copies and tangible embodiments thereof (in whatever form or medium).
(b) SCHEDULE 4.16 hereto sets forth a complete and correct
list of all United States and foreign patents and patent applications, trade
names, trademarks and service marks, trademark and service xxxx registrations,
applications for trademark and service xxxx registrations, copyright
registrations and applications for copyright registrations, that form a part of
the Intellectual Property owned by the Company or VisionTeq, or, where not
owned, expressly licensed for use by the Company or VisionTeq in the Business,
and all licenses or other agreements under which the Company or VisionTeq
obtained or licenses the right to use Intellectual Property. Except as expressly
set forth on SCHEDULE 4.16, the Company or VisionTeq is the sole owner of the
entire right, title, and interest in and to all Intellectual Property necessary
to conduct the Business as currently conducted. The Intellectual Property listed
on SCHEDULE 4.16 comprises all of the material patents, patent applications,
trademarks, trade names, copyrights, inventions, and discoveries, of every type
and description, used in or necessary to the conduct of the Business. Except as
provided on SCHEDULE 4.16, neither the Company nor VisionTeq has granted any
express license or other rights to such Intellectual Property, and is not liable
or obligated under any Contract for its use of any Intellectual Property,
whether for royalties or otherwise.
(c) Except as set forth on SCHEDULE 4.16, no claims by any
Person contesting the validity, enforceability, use or ownership of any of the
Intellectual Property listed thereon have been made, are currently outstanding
or to the Knowledge of the Company are threatened, against the Company or
VisionTeq, and to the Knowledge of the Company there are no facts or
circumstances which would reasonably be anticipated to result in any such claim
or which would reasonably lead the Company or VisionTeq to conclude that the
continued operation and conduct of any material aspect of the Business would
result in any such claim. Neither the Company nor VisionTeq has received any
written notice of, nor to the Knowledge of the Company are there any facts which
would indicate a likelihood of, any infringement or misappropriation by the
Company or VisionTeq upon, or other conflict by the Company or VisionTeq with,
any Intellectual Property or right of any other Person. The transactions
contemplated by this Agreement will have no adverse effect on any Intellectual
Property listed on SCHEDULE 4.16. Except as set forth on SCHEDULE 4.16, neither
the Company, VisionTeq, nor, to the Knowledge of the Company, any of the
Company's officers or employees have any agreements or arrangements
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with former employers of such officers and employees relating to confidential
information or trade secrets of such employers, the assignment of inventions of
such employers, or such officer's or employee's engagement in activities
competitive with such employers. The activities of such officers and employees
on behalf of the Company do not violate any agreements or arrangements Known to
the Company which any such officers or employees have with former employers.
4.17 PERMITS. SCHEDULE 4.17 lists all registrations, licenses,
permits, approvals, franchises, authorizations and qualifications issued to the
Company by any Governmental Authority (collectively, "PERMITS"). The Company is
in compliance with the terms of each Permit, and there is no pending or, to the
Knowledge of the Company, threatened cancellation, termination, non-renewal or
revocation of any such Permit. No other Permit, in addition to the Permits
currently held by the Company, is necessary to lawfully conduct the Company's
business as it is now conducted.
4.18 EMPLOYEE BENEFIT MATTERS.
(a) Set forth on SCHEDULE 4.18 is a true, complete and correct
list of all "employee benefit plans" as defined in Section 3(3) of ERISA, and
all other employee profit- sharing, incentive, deferred compensation, welfare,
pension, retirement, severance, group insurance and other employee benefit
plans, arrangements, agreements and practices (including all trust agreements,
insurance contracts or other funding vehicles, and all administrative services
or similar agreements relating thereto) currently maintained or contributed to
by the Company, or to which the Company currently is obligated to contribute,
relating to present or former employees, directors, officers, shareholders or
consultants of the Company (collectively, "EMPLOYEE PLANS").
(b) Except as set forth on SCHEDULE 4.18 or as shown on the
Company's Balance Sheet for the year ended December 31, 1999 (the "1999 BALANCE
SHEET"), the Company has no liability with respect to any plans, arrangements or
practices of the type described in the preceding paragraph (i) previously
maintained or contributed to by (A) the Company, (B) any other entity to which
the Company is a successor by merger or all or substantially all of the assets
of which were purchased by the Company (a "PREDECESSOR"), or (C) any entity at
any time treated, together with any Predecessor, as a single employer under
Section 414 of the Code or Section 4001 of ERISA or (ii) to which the Company,
any Predecessor or any other such entity referred to in (C) above previously had
an obligation to contribute. The Company has delivered to Buyer true, complete
and correct copies of each of the Employee Plans, including all amendments
thereto, and any other documents, forms or other instruments relating thereto.
(c) All Employee Plans are being, and have been, maintained,
operated and administered in accordance with their respective terms and in
compliance with all applicable Laws, except that the Form 5500 for 1999 has not
yet been filed, and the Company has performed all obligations required to be
performed under, and is not in default under or in violation of, any of the
Employee Plans.
(d) Neither the Company nor any entity which is or at any time
within the last six years has been treated together with the Company as a single
employer under Section 414 of the Code or Section 4001 of ERISA has or has ever
had, an obligation to contribute to a "defined benefit plan" as defined in
Section 3(35) of ERISA, a pension plan subject to the minimum funding standards
of Section 302 of ERISA or Section 412 of the Code, a "multiemployer plan"
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as defined in Section 3(37) of ERISA or Section 414(f) of the Code or a
"multiple employer plan" within the meaning of Section 210(a) of ERISA or
Section 413(c) of the Code. No Employee Plan is funded through a "welfare
benefit fund" as defined in Section 419(e) of the Code.
(e) Each Employee Plan intended to be qualified under Section
401(a) of the Code is so qualified and has, prior to the date of this Agreement,
been determined by the IRS to be so qualified, and each trust created thereunder
is, and has, prior to the date of this Agreement, been determined by the IRS to
be, exempt from Tax under the provisions of Section 501(a) of the Code, and
nothing has occurred since the date of any such determination that could
reasonably be expected to give the IRS grounds to revoke such determination. No
reportable event (within the meaning of Section 4043 of ERISA) has occurred.
(f) There have been no prohibited transactions or breaches of
any of the duties imposed on "fiduciaries" (within the meaning of Section 3(21)
of ERISA) by ERISA with respect to the Employee Plans that could result in the
Company becoming liable directly or indirectly (by indemnification or otherwise)
for any excise Tax, penalty or other liability under ERISA or the Code.
(g) There are no Actions or claims pending or, to the
Knowledge of the Company, threatened, with respect to any Employee Plan (other
than routine claims for benefits), there are no investigations or audits of any
Employee Plan by any Government at Authority currently pending and there have
been no such investigations or audits that have been concluded that resulted in
any liability of the Company that has not been fully discharged.
(h) All (i) insurance premiums required to be paid with
respect to, (ii) benefits, expenses, and other amounts due and payable under,
and (iii) contributions, transfers, or payments required to be made to, any
Employee Plan have been paid, made or accrued as a liability on the Interim
Company Financial Statements. With respect to any insurance policy providing
funding for benefits under any Employee Plan, (i) there is no liability of the
Company, in the nature of a retroactive or retrospective rate adjustment, loss
sharing arrangement, or other actual or contingent liability, nor would there be
any such liability if such insurance policy was terminated on the date of this
Agreement, and (ii) to the Knowledge of the Company, no insurance company
issuing any such policy is in receivership, conservatorship, liquidation or
similar proceeding and no such proceedings with respect to any insurer are
imminent.
(i) Each Employee Plan that is a group health plan subject to
Section 4980B of the Code (or which was subject to Section 162(k) of the Code)
has been operated in compliance with the continuation coverage requirements of
Section 4980B of the Code and Section 162(k) of the Code, as applicable, and
Part 6 of Subtitle B of Title I of ERISA. The Company has complied with the
Health Insurance Portability and Accountability Act of 1996 with respect to any
group health plan within the meaning of Section 5000(b)(1) of the Code.
(j) Each Employee Plan that is subject to Section 1862(b)(1)
of the Social Security Act has been operated in compliance with the secondary
payer requirements of Section 1862(b)(1) of such Act.
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(k) SCHEDULE 4.18 contains a separate identification of each
Employee Plan that provides benefits, including, without limitation, death or
medical benefits, beyond termination of employment or retirement other than (A)
coverage mandated by Law or (B) death or retirement benefits under any qualified
Employee Plan (the "POST-EMPLOYMENT BENEFITS"). Except as set forth on SCHEDULE
4.18, the 1999 Balance Sheet accurately reflects the liabilities relating to the
Post-Employment Benefits including, where appropriate, accruals and other
disclosure information required by the terms of Financial Accounting Standards
Board Statements of Financial Accounting Standards Number 106 and 112 (whether
or not such standards, or either thereof, apply to or are in effect with respect
to the Company).
(l) The execution and performance of this Agreement will not,
solely in and of itself, (A) constitute a stated triggering event under any
Employee Plan that will result in any payment (whether of severance pay or
otherwise) becoming due from the Company to any present or former officer,
employee, director, shareholder or consultant (or dependents of any thereof), or
(B) accelerate the time of payment or vesting, or increase the amount, of
compensation due to any present or former employee, officer, director,
shareholder or consultant of the Company.
(m) Except as set forth on SCHEDULE 4.18, the Company has not
agreed or committed to make any amendments to any of the Employee Plans not
already embodied in the documents comprising any such Employee Plan, other than
any amendments required by Law, nor has the Company obligated itself to
institute any plans, programs or amendments that would be Employee Plans if in
existence on the date of this Agreement.
(n) The Company has reserved all rights necessary to amend or
terminate each of the Employee Plans without the consent of any other Person,
except with respect to claims under any such Employee Plan that are accrued but
unpaid as of the date of any such amendment or termination.
(o) Each "fiduciary" and every "plan official" (as defined in
Section 412 of ERISA) of each Employee Plan is bonded to the extent required by
Section 412 of ERISA.
(p) All contributions, transfers, and payments by the Company
in respect of any Employee Plan have been or are fully deductible under the
Code.
(q) No Employee Plan provides benefits to any individual who
is not a current or former employee of the Company, or the dependents or other
beneficiaries of any such current or former employee.
(r) All contributions required to be paid with respect to
workers' compensation or similar arrangements of the Company have been made or
accrued as a liability on the Interim Company Financial Statements.
(s) No other trade or business is or, at any time within the
past six years, has been treated, together with the Company, as a single
employer under Section 414 of the Code or Section 4001 of ERISA.
4.19 EMPLOYEE RELATIONS; COLLECTIVE BARGAINING AGREEMENTS.
SCHEDULE 4.19 sets forth the collective bargaining agreements and union
contracts to which the
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Company or VisionTeq is a party. Except as set forth on SCHEDULE 4.19, no trade
union, council of trade unions, employee bargaining agency or affiliated
bargaining agent (i) holds bargaining rights with respect to any of the
Company's or VisionTeq's employees by way of certification, interim
certification, voluntary recognition, designation or successor rights, or (ii)
to the Knowledge of the Company, has applied to be certified as the bargaining
agent of any of the Company's or VisionTeq's employees. There are no material
controversies pending, or to the Knowledge of the Company, threatened which
involve any employees employed in connection with the business of the Company or
VisionTeq.
4.20 EMPLOYEE MATTERS.
(a) Except as set forth on SCHEDULE 4.20, to the Knowledge of
the Company, no officer, general manager, plant manager or employee with the
title of director intends to terminate their employment with the Company, nor
does the Company have a present intention to terminate the employment of any of
the foregoing. The Company is in material compliance with all applicable Laws
respecting labor, employment, fair employment practices, terms and conditions of
employment and wages and hours and there are no charges of employment
discrimination or unfair labor practices pending or to the Knowledge of the
Company, threatened against the Company. To the actual knowledge of the Company
(without any independent investigation or inquiry), during the past three years,
no officer, director or senior manager of the Company has ever been investigated
for, arrested for, been part of a proceeding for, charged with, convicted of or
indicted for any felony.
(b) Except as disclosed on SCHEDULE 4.20, there are no (i)
Contracts of employment entered into with any employees or independent
contractors of the Company or VisionTeq which are not terminable on the giving
of reasonable notice in accordance with applicable law, (ii) employment policies
relating to termination of employees, including policies regarding incentive
compensation, stock options, severance pay or other terms or conditions of
employment or terms or conditions upon which employees may be terminated, which
are binding upon the Company or VisionTeq or (iii) complaints against the
Company or VisionTeq before any employment standards branch or tribunal or
Governmental Authority, nor, to the Knowledge of the Company, are there any
threatened complaints. To the Knowledge of the Company, there has been no
occurrence which would reasonably be expected to lead to a complaint under any
human rights legislation or employment standards legislation. There are no
outstanding decisions or settlements or pending settlements against the Company
or VisionTeq under the employment standards legislation which place any
obligation upon the Company or VisionTeq to do or refrain from doing any act.
4.21 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE
4.21, (a) the Company and each Subsidiary has been and currently is in
compliance with all applicable Environmental Laws; (b) there has been no Release
and is no continuing or threatened Release of a Hazardous Substance from any
property currently owned, leased or operated by the Company or any Subsidiary;
(c) there has been no Release or threatened Release of a Hazardous Substance
from any property previously owned, leased or operated by the Company or any
Subsidiary during the time the Company or Subsidiary owned, leased or operated
such property; (d) to the Knowledge of the Company, neither the Company nor any
Subsidiary disposed of or arranged for the disposal of any Hazardous Substance
at any property from which there has been or is a continuing or threatened
Release of a Hazardous Substance; (e) neither the Company nor any
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Subsidiary has generated, treated, stored, transported, handled, disposed of or
otherwise managed any Hazardous Substance except in a manner that is in
compliance with all applicable Environmental Laws and that cannot reasonably be
expected to result in a Release or threatened Release of such Hazardous
Substance; (f) neither the Company nor any Subsidiary has received any claim or
notice relating to any potential liability of the Company or Subsidiary arising
under any Environmental Laws or relating to any alleged failure of the Company
or Subsidiary to comply with any Environmental Laws or relating to any alleged
failure of the Company or Subsidiary to comply with any Environmental Law; and
(g) Buyer has been furnished with true and complete copies of all reports,
assessments, audits or investigations in the possession or control of the
Shareholders, Company or any Subsidiary pertaining to environmental conditions
or compliance at any property currently or previously owned, leased or operated
by the Company; (h) all the Permits, licenses, approvals or other authorizations
required to operate the Business have been issued to the Company, are currently
effective and are listed on SCHEDULE 4.21; (i) there are no present facts or
circumstances Known to the Company which would adversely affect or render
significantly more costly in the future the Company's compliance with existing
Environmental Laws; and (j) no PCB's (polychlorinated biphenyls), asbestos, or
underground storage tanks are or were ever used in the construction or operation
of, or located on, the premises or facilities presently or previously owned,
leased or used by the Company during the time the Company owned, leased or
operated such property.
4.22 LITIGATION. Except as set forth on SCHEDULE 4.22, (i)
neither the Company nor VisionTeq is subject to any order of, or written
agreement or memorandum of understanding with, any Governmental Authority which
would have a Material Adverse Effect, (ii) there are no Actions pending at law
or in equity or before or by any Governmental Authority, or, to the Knowledge of
the Company, threatened, against the Company or VisionTeq or any of their assets
or properties or the transactions contemplated by this Agreement, and to the
Knowledge of the Company, there exist no facts or circumstances which reasonably
could be anticipated to result in any such Action and (iii) no Person has
asserted, and, to the Knowledge of the Company, no Person has a valid basis upon
which to assert, any claims against the Company or VisionTeq which would
materially adversely affect the transactions contemplated by this Agreement or
result in or form the basis of any such Action. There is no Action or
investigation by the Company or VisionTeq currently pending or which the Company
or VisionTeq intends to initiate.
4.23 ACCOUNTS RECEIVABLE; INVENTORY. All accounts receivable
reflected on the 1999 Balance Sheet and all accounts receivable arising
subsequent to the 1999 Balance Sheet with respect to the Business have arisen
only in the ordinary course of business, consistent with past practice, are bona
fide, are not subject to defenses, set-offs or counterclaims, and are
collectible in the ordinary course of business, except to the extent reflected
in the 1999 Balance Sheet as an allowance for doubtful accounts, which allowance
is reasonable and appropriate based on the experience of the Company. The
Company's inventory of raw materials, work-in-progress, finished goods, spare
parts, supplies and other inventory items reflected on the 1999 Balance Sheet
and acquired subsequent to the date of the 1999 Balance Sheet consists of items
of a type, quantity and quality which can be sold, used or consumed in the
ordinary course of the Company's business, at normal and customary profit
margins and is valued on the first-in first-out basis at the lower of cost or
market. None of the Company's inventory is held by the Company on consignment
from third parties. None of the Company's inventory is held on consignment, or
otherwise, by third parties.
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4.24 PRODUCT WARRANTY AND PRODUCT LIABILITY. There are no
product warranty or product liability claims pending or, to the Knowledge of the
Company, threatened against the Company and, to the Knowledge of the Company,
there is no state of facts or the occurrence of any event forming the basis for
any such product warranty, product liability or other tort claim. SCHEDULE 4.24
sets forth a complete and accurate summary of product liability claims made
against the Company within the past five years.
4.25 CUSTOMERS AND SUPPLIERS. SCHEDULE 4.25 sets forth the
Company's ten largest customers and suppliers for each of the Company's three
operating units. To the Knowledge of the Company, there exists no present
condition or state of facts involving such customers or suppliers which would
reasonably be expected to have a Material Adverse Effect (individually or in the
aggregate) on the Business. Except as set forth on SCHEDULE 4.25 or to the
Knowledge of the Company, no customer or supplier has notified the Company that
such customer or supplier will not continue to do business with the Company
after the Closing Date in substantially the same capacity or manner as it did
prior to the Closing Date.
4.26 ABSENCE OF CERTAIN COMMERCIAL PRACTICES. Neither the
Company, nor to the Knowledge of the Company any officer, director or senior
manager of the Company (or any Person acting on behalf of any of the foregoing),
has (i) given or agreed to give any gift or similar benefit of more than $1,000
on behalf of the Company to any customer (other than promotional benefits
offered generally to customers), supplier, employee or official of any
Governmental Authority (domestic or foreign), to induce the recipient or his
employer to do business, grant favorable treatment or compromise or forego any
claim, (ii) made any payment in an amount greater than $1,000 which might be
improper under prevailing United States laws (regardless of the jurisdiction in
which such payment was made) to promote or retain sales or to help, procure or
maintain good relations with suppliers, (iii) engaged in any activity which
would constitute a violation of the federal or applicable state antitrust laws
of the United States or (iv) failed to perform its obligations in any material
respect under any Contract with, or violated in any material respect any federal
law Known to the Company in its dealings with, the federal government or any
agency or department thereof, including, but not limited to, any law with
respect to conspiracy to defraud, false claims, conspiracy to defraud the United
States, embezzlement or theft of public money, fraud and false statements, false
demands against the United States, mail fraud, wire fraud, RICO, and truth in
negotiations.
4.27 INDEBTEDNESS. SCHEDULE 4.28 sets forth an accurate and
complete list of the Company's Indebtedness.
4.28 TITLE TO AND SUFFICIENCY OF ASSETS. The properties and
assets of the Company (including, without limitation, the assets and properties
reflected on the Financial Statements) are in good operating condition and
repair (subject to normal wear and tear consistent with the age of the
properties or assets) and are sufficient for the operations of the Company as
currently conducted. Except as set forth on SCHEDULE 4.28, the Company has good
title to all its material tangible and intangible personal properties and
assets, free and clear of any and all Liens.
4.29 BUSINESS. The Company is not engaged in any material
business or operations other than the Business.
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4.30 BUDGET. The budget for the Company for the period from
January 1, 2000 through December 31, 2000 attached as SCHEDULE 4.30 hereto (the
"BUDGET") was prepared in good faith by the Company based on assumptions its
management believed to be reasonable at the time prepared. No representation is
made that the actual results will be the same as the Budget.
4.31 BROKERS, FINDERS AND AGENTS. No broker, finder or similar
agent has been employed by or on behalf of the Company, and no Person with which
the Company has had any dealings or communications of any kind is entitled to
any brokerage commission, finder's fee or any similar compensation in connection
with this Agreement or the transactions contemplated hereby.
4.32 DISCLOSURE. To the Knowledge of the Company, no
information in this Agreement, or in any Schedule or Exhibit attached to this
Agreement or delivered to Buyer in connection herewith, contains any untrue
statement of a material fact or when considered together with all such
information delivered to the Investors omits to state any material fact
necessary in order to make the statements made in the light of the circumstances
under which they were made, when taken as a whole, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer represents and warrants to the Shareholders as follows:
5.1 ORGANIZATION AND STANDING; CORPORATE POWER AUTHORITY.
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio, and has the corporate power and authority
to make and perform this Agreement, and to perform the transactions contemplated
by this Agreement. This Agreement and all other agreements and instruments
executed and delivered by Buyer in connection with this Agreement have been duly
executed and delivered by Buyer. This Agreement and the transactions and other
agreements and instruments contemplated by this Agreement have been duly
approved by the Board of Directors of Buyer, and constitute the valid and
binding obligations of Buyer, enforceable in accordance with their respective
terms.
5.2 NO BREACH. Neither the execution and delivery of, nor the
performance by Buyer of its obligations under this Agreement, nor the
consummation of the transactions contemplated hereby, will (a) violate, conflict
with or result in the breach of, any applicable Law or Order, or the Articles of
Incorporation or Code of Regulations of Buyer, (b) result in the creation of any
Lien upon any of the assets or properties of Buyer or (c) violate, conflict
with, result in the breach of or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
accelerate or permit the acceleration of the performance required by, or
otherwise give any Person additional rights or compensation under, any note,
deed, lease, instrument, security agreement or mortgage, any commitment,
Contract, license, sales commitment or other instrument or oral understanding to
which Buyer is a party or by which any of its assets or properties are bound.
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5.3 BROKERS, FINDERS AND AGENTS. No broker, finder or similar
agent has been employed by or on behalf of Buyer, and no Person with which Buyer
has had any dealings or communications of any kind is entitled to any brokerage
commission, finder's fee or any similar compensation in connection with this
Agreement or the transactions contemplated hereby.
5.4 INVESTMENT INTENT. Buyer is acquiring the Shares for its
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof.
ARTICLE VI
COVENANTS
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6.1 REASONABLE ACCESS.
(a) From the date of this Agreement until the Closing, the
Shareholders shall cause the Company and its officers and directors to give
Buyer and its representatives (including its lenders or other sources of
financing), upon reasonable notice to the Shareholders and the Company,
reasonable access to the assets, properties, offices, facilities, books,
records, Tax records, Tax Returns and Contracts of the Company in order to
permit Buyer and its representatives to make such inspections as they may
reasonably require and to furnish Buyer and its representatives during such
period with all such information relating to the Company as Buyer may from time
to time reasonably request. Such access shall include the opportunity for Buyer
and its representatives (including its lenders or other sources of financing) to
discuss the affairs, finances and accounts of the Company with any of the
Company's executive officers, directors or independent accountants.
(b) For a period of three years after the Closing Date, Buyer
shall make available to the Shareholders' Representative during normal business
hours and upon reasonable notice, any books and records relating to the Business
prior to the Closing Date to which the Shareholders' Representative has a
reasonable need for access that are requested by the Shareholders'
Representative. Buyer will permit the Shareholders' Representative to examine
and, at its own expense, copy such books and records. The Shareholders'
Representative agrees to keep any such books and records confidential.
6.2 CONDUCT OF BUSINESS OF THE COMPANY. Prior to the Closing
Date, the Shareholders shall cause the Company to (i) conduct its business only
in the ordinary course, (ii) maintain in traditional repair all of its tangible
property, (iii) use reasonable efforts to preserve intact its business
organization, (iv) keep available the services of its present officers and
employees and (v) preserve in all material respects its present business
relationships and goodwill. Without limiting the foregoing, except as otherwise
expressly permitted by this Agreement, the Company, without the prior consent of
Buyer, shall not and the Shareholders shall cause the Company not to:
(a) amend its articles of incorporation or By-laws or other
charter documents;
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(b) purchase, redeem, issue, sell, offer to sell or otherwise
dispose of, directly or indirectly, any of its capital stock or other equity
securities, or create or suffer to be created any Lien thereon, or reclassify,
split-up or otherwise change any of its capital stock or other equity securities
or grant or enter into any options, covenants or calls or other rights to
purchase, exchange or convert any obligation into any of its capital stock or
other equity securities;
(c) organize any Subsidiary or acquire any capital stock or
other equity securities of any Person or any Investment in any Person;
(d) incur any Indebtedness, except for Indebtedness incurred
in the ordinary course of business consistent with past practice, which
Indebtedness shall not exceed $125,000;
(e) pay, discharge or satisfy any claim, liability or
obligation (whether fixed or contingent), other than in the ordinary course of
business;
(f) make or grant any increases in salaries, bonuses, benefits
or other remuneration to the officers or employees of the Company not in the
ordinary course of business;
(g) sell, assign, transfer, convey, lease, pledge, encumber or
otherwise dispose of or agree to sell, assign, transfer, convey, lease, pledge,
encumber or otherwise dispose of any of its assets or properties, or any other
material right, other than in the ordinary course of business;
(h) declare or pay any dividend or make any other payment or
distribution in respect of its capital stock or other equity securities;
(i) enter into any Contract that would be required to be
disclosed on SCHEDULE 4.11, including, without limitation, any Contract with any
Affiliate of any Shareholder or the Company;
(j) make any change in any method of accounting or auditing
practice;
(k) amend, modify or cancel any Contract, Permit or lease;
(l) grant or extend any power of attorney or act as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any Person, other than through endorsements of negotiable
instruments in the ordinary course of business;
(m) in any other manner, modify, change or otherwise alter the
fundamental nature of the Business;
(n) enter into any Contract whereby the Company or VisionTeq
would incur a loss with respect to such Contract; or
(o) agree to take any of the foregoing actions.
6.3 NO SOLICITATION OF OFFERS. None of the Shareholders, the
Company or any of their Affiliates or officers, directors, employees,
stockholders, partners, agents, advisers or
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representatives shall, directly or indirectly, solicit or initiate discussions,
inquiries, offers or proposals, or participate in any negotiation for the
purpose or with the intention of leading to any offer or proposal, concerning
any acquisition (in whatever form of transaction) of all or a substantial
portion of the capital stock or substantial assets of the Company or any of its
Subsidiaries, except for this Agreement.
6.4 FILINGS; OTHER ACTIONS. Subject to the terms and
conditions herein provided, the Shareholders and Buyer shall (a) promptly make
their respective filings and thereafter make any other required submissions
under the HSR Act, (b) use their reasonable best efforts to cooperate with each
other in determining which filings are required to be made prior to the Closing
Date with, and which Consents are required to be obtained prior to the Closing
Date from, Governmental Authorities in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and timely making all such filings and timely seeking all such Consents
and (c) use their reasonable best efforts to cause the conditions to each of the
Shareholders and Buyers obligations hereunder to be fulfilled.
6.5 PUBLICITY. The Company and Buyer shall make a joint press
release announcing the execution of this Agreement and the transactions
contemplated hereby that shall be acceptable to each of the Company and Buyer.
No other publicity release or announcement concerning the transactions
contemplated hereby shall be issued by either party without the advance written
consent of such other party; PROVIDED, HOWEVER, that such restriction shall not
apply to any disclosure by Buyer of any information required in Buyer's sole
judgment to be disclosed pursuant to the Securities Act of 1933, as amended or
the Securities Exchange Act of 1934, as amended, or the rules and regulations of
the New York Stock Exchange or the Pacific Stock Exchange.
6.6 SATISFACTION OF CLOSING CONDITIONS. Without limiting the
other provisions of this Article VI, (a) each of the Shareholders and the
Company shall use reasonable efforts to cause the conditions to Buyer's
obligation to close to be satisfied on or prior to the Closing Date and (b)
Buyer shall use reasonable efforts to cause the conditions to the Shareholders
obligation to close to be satisfied on or prior to the Closing Date.
6.7 NO TRANSFERS OF SHARES. The Shareholders shall not,
directly or indirectly, sell, assign, transfer, distribute, pledge, hypothecate,
encumber or otherwise dispose of any Shares (whether voluntarily, involuntarily,
by operation of law or otherwise), or agree to do any of the foregoing;
PROVIDED, HOWEVER, that the Shareholders may transfer Shares to other
Shareholders.
6.8 NOTICE OF CERTAIN EVENTS. The Shareholders and the Company
and Buyer each agrees to give prompt written notice to the others of (i) the
occurrence, or failure to occur, of any event which could cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect at any time from the date of this Agreement through
the Closing Date, promptly upon becoming aware of such event, (ii) any material
failure on its part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement and (iii)
any changes to any of the Schedules to this Agreement; PROVIDED, HOWEVER, that
the delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available to the parties receiving such notice.
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6.9 TAX MATTERS.
(a) After the Closing, the Shareholders shall cooperate with
Buyer, the Company and any Taxing Authority in preparing, filing and responding
to any inquiries regarding any Tax Return and in any audit of the Company or
VisionTeq for, or concerning any portion of, any period ended prior to the
Closing Date and for any Current Period. In addition, the Shareholders shall
make available to Buyer and the Company, as reasonably requested, and to any
Taxing Authority, all information, records or documents relating to the
liability for Taxes or potential liability of the Company for Taxes for all such
periods.
(b) The Company will complete and file its 1999 Tax Returns
prior to the Closing Date.
(c) For so long as the Escrow Agreement is in effect, the
Shareholders' Representative will have the right to control any audit or
determination by any Taxing Authority, to initiate any claim for refund or file
any amended Tax Return, and to contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed adjustment of
Taxes for any Pre-Closing Period; PROVIDED, HOWEVER, that the Shareholders'
Representative shall not settle any claim with respect to Taxes which may affect
the Tax liability of the Company for periods in which the Shareholders are not
responsible under this Agreement without the prior written consent of Buyer,
which consent shall not be unreasonably withheld. The Shareholders'
Representative shall keep Buyer informed with respect to all material aspects of
such claims relating to Taxes.
6.10 INSURANCE CLAIM. After the Closing Date, if the Company
collects the insurance proceeds payable to the Company relating to the fire that
occurred on October 21, 1998, Buyer shall make an additional payment to the
Shareholders by means of a single wire transfer to the Shareholders'
Representative equal to the net amount (after any applicable Taxes are paid by
the Company) of such proceeds received by the Company, as additional Purchase
Price.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
7.1 CONDITIONS TO OBLIGATIONS OF THE COMPANY, THE SHAREHOLDERS
AND BUYER. The respective obligations of the Company, the Shareholders and Buyer
to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction or waiver at or prior to the Closing of each of the
following conditions:
(a) The waiting period applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act shall have expired
or been terminated.
(b) None of the parties hereto shall be subject to any pending
litigation against the transactions contemplated by this Agreement of a court of
competent jurisdiction that prohibits the consummation of the transactions
contemplated by this Agreement. In the event
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any such Order shall have been issued, each party agrees to use its reasonable
best efforts to have any such Order overturned or lifted.
7.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver at or prior to the Closing, of the
following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Shareholders and the Company contained in
this Agreement shall be true and correct in all material respects as made, both
on the date of this Agreement and at and as of the Closing, except for
representations or warranties made as of a specified date or for a specified
period ending on or prior to the date of this Agreement, which as of the Closing
shall remain true and correct in all material respects as of the specified date
or for such specified period.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS. The Shareholders
and the Company shall have performed or complied with, in all material respects,
all covenants and agreements contemplated by this Agreement to be performed or
complied with by them at or prior to the Closing.
(c) RECEIPT OF DOCUMENTS. The Shareholders shall have
delivered, or caused to be delivered, to Buyer each of the documents required by
Section 2.2.
(d) MATERIAL ADVERSE CHANGE IN BUSINESS. Between the date of
this Agreement and the Closing there shall have been no Material Adverse Effect.
(e) CONSENTS AND PERMITS. All Consents and Permits of any
Person necessary for the consummation of the transactions contemplated by this
Agreement, including those listed on SCHEDULES 4.6 or 4.17, shall have been
made, given or obtained without the payment of any consideration or modification
of any terms or conditions of the applicable Contract, Permit or license and
shall be in full force and effect.
(f) NET WORTH. The Company's Net Worth shall not be less than
$8,100,000.
7.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE
SHAREHOLDERS. The obligation of the Company and the Shareholders to consummate
the transactions contemplated by this Agreement shall be subject to the
satisfaction or waiver at or prior to the Closing of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as made, both on the date of this
Agreement and at and as of the Closing, except for representations or warranties
made as of a specified date or for a specified period ending on or prior to the
date of this Agreement, which as of the Closing shall remain true and correct in
all material respects as of the specified date or for such specified period.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS. Buyer shall have
performed or complied with, in all material respects, all covenants and
agreements contemplated by this Agreement to be performed or complied with by
Buyer at or prior to the Closing.
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(c) RECEIPT OF DOCUMENTS. Buyer shall have delivered, or
caused to be delivered, to the Shareholders each of the documents required by
Section 2.3.
ARTICLE VIII
INDEMNIFICATION, REMEDIES AND SURVIVAL
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8.1 INDEMNIFICATION BY THE SHAREHOLDERS. Subject to the terms
and conditions of this Article VIII, each Shareholder shall indemnify, defend
and hold harmless the Company, Buyer, its Affiliates and their respective
officers, directors, agents and employees (collectively, the "BUYER INDEMNIFIED
PARTIES") from and against, and reimburse any Buyer Indemnified Party for, any
and all damages, liabilities, obligations, claims, Actions, losses, penalties,
fines, judgments, awards, settlements, Taxes, costs, fees, expenses and
disbursements (including reasonable attorneys' and consultants' fees and
expenses and other reasonable legal costs and expenses reasonably incurred in
prosecution, investigation, remediation, defense or settlement) (collectively
"LOSSES") that any Buyer Indemnified Party may at any time suffer or incur or
become subject to resulting from, arising out of or relating to (a) any
inaccuracy in any representation or warranty made by such Shareholder pursuant
to Article III of this Agreement and (b) any failure by such Shareholder to
perform any of his, her or its covenants or agreements contained in this
Agreement. Buyer acknowledges that each Shareholder is liable under this Section
8.1 only for his, her or its own representations, warranties, covenants and
agreements and that no Shareholder shall have liability for any breach of such
representations, warranties, covenants or agreements by any other Shareholder or
by the Company.
8.2 BUYER'S OTHER POST-CLOSING REMEDIES. Subject to the terms
and conditions of this Article VIII and the Escrow Agreement, Buyer shall be
entitled to recover out of the Escrow Amount any and all Losses that any Buyer
Indemnified Party may at any time suffer or incur or become subject to resulting
from, arising out of or relating to (a) any inaccuracy in any representation or
warranty made by the Shareholders and the Company pursuant to Article IV of this
Agreement, (b) any failure by the Shareholders or the Company to perform any of
their or its covenants or agreements contained in this Agreement, (c) legal
obligations or liabilities imposed by Environmental Laws (but not voluntarily
incurred by the Company or Buyer) with respect to any and all known or unknown
environmental matters or conditions, existing or occurring on or prior to the
Closing Date that are the result of the Company's actions prior to the Closing
Date or that are the result of actions by third parties prior to the Closing
Date to the extent the Company had Knowledge of such actions prior to the
Closing Date, (d) any product liability relating to products manufactured by the
Company prior to the Closing Date or (e) any liability not reflected on the
Interim Company Financial Statements, except as incurred since the date of the
Interim Company Financial Statements in the ordinary course of business
consistent with past practice.
8.3 INDEMNIFICATION BY BUYER. Subject to the terms and
conditions of this Article VIII, Buyer shall indemnify, defend and hold harmless
the Shareholders and each of their respective successors, assigns, heirs,
executors and personal representatives (collectively, the "SHAREHOLDER
INDEMNIFIED PARTIES") from and against, and reimburse any Shareholder
Indemnified Party for, any and all Losses that any Shareholder Indemnified Party
may at any time suffer or incur or become subject to resulting from, arising out
of or relating to (a) any
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inaccuracy in any representation or warranty made by Buyer in this Agreement or
(b) any failure by Buyer to perform any of its covenants or agreements contained
in this Agreement.
8.4 DIRECT CLAIMS. In the event a Buyer Indemnified Party or a
Shareholder Indemnified Party (the "CLAIMANT") desires to make a claim for
indemnification pursuant to Sections 8.1, 8.3 or 8.7 against the other or
recovery pursuant to Section 8.2 (the "INDEMNITOR"), the Claimant shall give
prompt written notice of the claim to the Indemnitor, describing, in reasonable
detail, to the extent known, the nature of the claim. Failure to give such
notice shall not affect the indemnification provided hereunder except to the
extent that such failure shall have actually and materially prejudiced the
Indemnitor as a result thereof.
8.5 THIRD PERSON CLAIMS.
(a) If any third Person shall notify a Buyer Indemnified Party
or a Shareholder Indemnified Party (the "INDEMNIFIED PARTY") with respect to any
matter (a "THIRD PERSON CLAIM") that may give rise to a claim for
indemnification pursuant to Sections 8.1, 8.3 or 8.7 or recovery pursuant to
Section 8.2, then the Indemnified Party shall promptly notify the Shareholders
or Buyer, as the case may be (the "INDEMNIFYING PARTY"), thereof in writing.
Failure to give such notice shall not affect the indemnification provided
hereunder except to the extent that such failure shall have actually and
materially prejudiced the Indemnifying Party as a result thereof.
(b) The Indemnifying Party shall notify the Indemnified Party
in writing, as promptly as possible (but in any case before the due date for the
answer or response to a claim) after the date of the notice of claim given by
the Indemnified Party to the Indemnifying Party under Section 8.5(a), of its
election to defend any such Third Person Claim. Subject to Section 8.5(d) below,
if the Indemnifying Party elects to defend such Third Person Claim, the
Indemnifying Party will have the right to assume and thereafter conduct at its
own expense the defense of the Third Person Claim with counsel of its choice,
which counsel is reasonably acceptable to the Indemnified Party. The Indemnified
Party shall make available to the Indemnifying Party or its agents all records
and other materials in the Indemnified Party's possession reasonably required by
the Indemnifying Party for use in defending any Third Person Claim. The
Indemnifying Party shall not consent to the entry of any judgment or settle or
compromise any such claim, unless the Indemnified Party is given a full,
complete and unconditional release of any and all liability for such Third
Person Claim. So long as the Indemnifying Party is actively and diligently
defending any such Third Person Claim, the Indemnified Party shall not consent
to the entry of any judgment or settle or compromise such claim without the
prior written consent of the Indemnifying Party.
(c) Unless and until an Indemnifying Party assumes the defense
of the Third Person Claim as provided in Section 8.5(b), the Indemnified Party
shall defend against or settle the Third Person Claim. The reasonable costs of
such defense or settlement shall be included in determining Losses relating to
the Third Person Claim. If the Indemnifying Party is not defending any such
Third Person Claim, the Indemnified Party may settle or compromise such claim on
reasonable terms, provided that it shall not enter into any settlement or
compromise with respect to a Third Person Claim without the prior written
consent of each of the Indemnifying Parties, which consent shall not be
unreasonably withheld.
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(d) The Indemnified Party and the Indemnifying Party shall
each have the right to participate in the defense of any Third Person Claim for
which it is not controlling the defense, at its own expense.
8.6 LIMITATIONS; SURVIVAL.
(a) No Indemnifying Party shall have any liability under
Sections 8.1 or 8.3(a), and Buyer shall not have a claim for recovery under
Section 8.2 (i) for Losses arising out of any individual unrelated claim or
series of related claims that do not exceed $25,000, (ii) unless and until the
aggregate amount of all Losses (other than Losses arising out of any individual
unrelated claim or series of related claims that do not exceed $25,000)
affecting the Indemnified Party exceeds $300,000 (the "Deductible"), in which
event, the Indemnifying Party shall indemnify the Indemnified Party (or Buyer
shall be entitled to recover from the Escrow Amount) to the extent such Losses
exceed $300,000 (subject to clause (iii) below) and (iii) to the extent the
aggregate amount of such payments for Losses to the Indemnified Party by an
Indemnifying Party for Losses under Section 8.1 would exceed the Purchase Price
payable to such Shareholder. For claims under Section 8.1, the amount of any
such claims against a specific Shareholder that are applied against the
Deductible shall be limited to such Shareholder's pro rata portion of the
Deductible (based on such Shareholder's percentage interest set forth on
Schedule 3.1 multiplied by $300,000).
(b) All of the representations and warranties of the Buyer
contained in this Agreement or in any certificate furnished pursuant to this
Agreement shall survive the Closing and continue in full force and effect until
the second anniversary of the Closing Date. The representations and warranties
made in Article IV of this Agreement shall survive until Escrow Amount shall
have been paid out pursuant to the Escrow Agreement. The representations and
warranties made in Article III shall survive until the expiration of the
applicable statute of limitation. The covenants and agreements made in Article
VI shall survive until such time as fully complied with. The covenants and
agreements that are to be performed in whole or in part after the Closing Date
and that, by their terms, expire on a specified date shall survive until such
date. Notwithstanding anything to the contrary herein, no claim for
indemnification under this Article VIII shall be made with respect to any
representation or warranty herein after the survival period for such
representation or warranty, except as to any matters with respect to which a
bona fide written claim shall have been made or an Action at law or in equity
shall have commenced before such date, in which event the applicable survival
period shall continue (but only with respect to, and to the extent of, such
claim) until the final resolution of such claim or Action, including all
applicable periods for appeal, provided that, in the case of any claims for
Losses limited to the Escrow Amount, no claim for indemnification shall be made
after the expiration of the applicable survival period except as to matters for
which a claim under the terms of the Escrow Agreement has been properly made by
Buyer and the Escrow Amount retained by the Escrow Agent with respect to such
claim as provided in the Escrow Agreement.
(c) The parties acknowledge and agree that, after consummation
of the Closing, the indemnification and recovery provisions set forth in this
Article VIII constitute the parties' sole and exclusive remedy with respect to
any and all Losses relating to the transactions contemplated by this Agreement.
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(d) The amount of any Losses required to be paid under this
Agreement will be reduced by any insurance proceeds actually received by the
Indemnified Party as a result of the Losses. The Indemnified Party will be
obligated to submit to its insurance carrier all potentially coverable Losses
and pursue such claims against its insurance carrier in good faith, and will not
abandon or compromise any such claim without the written consent of the other
party.
8.7 TAX INDEMNITY.
(a) The parties agree that, notwithstanding any other
provision set forth in this Article VIII any and all indemnification or rights
to recovery relating to Taxes shall be governed by this Section 8.7 exclusively.
(b) Buyer shall be entitled to recover out of the Escrow
Amount all Taxes of the Company that relate to (i) any breach by the Company or
the Shareholders of any of their covenants contained in Section 6.9 of this
Agreement, (ii) any inaccuracy in the representations or warranties made by the
Company and the Shareholders in Section 4.13 of this Agreement, and (iii) Taxes
incurred by the Company on or before the Closing Date (in excess of the amounts
reserved on the Interim Company Financial Statements or in the Net Worth
Statement).
(c) Buyer shall be liable for, shall pay to the appropriate
Taxing Authorities, and shall hold the Shareholders harmless against all Taxes
of the Company that relate to (i) the taxable periods that begin after the
Closing Date and (ii) the Post-Closing Period. Buyer shall be entitled to any
Tax refund (including, without limitation, interest) whether attributable to
taxable periods before or after the Closing Date.
(d) The obligations of the Buyer to indemnify the Shareholders
pursuant to this Section 8.7 shall continue until the statutory period of
limitations (taking into account any extensions or waivers thereof) plus 60 days
for the assessment of Taxes, covered by this Section 8.7, have expired.
8.8 PROCESS FOR RECOVERY FROM THE ESCROW AMOUNT BY BUYER
INDEMNIFIED PARTIES. If any Buyer Indemnified Party is entitled to recovery from
the Escrow Amount under this Agreement, Buyer shall collect the amount for such
claim from the Escrow Agent by submitting a claim therefor against the Escrow
Amount then being held pursuant to the Escrow Agreement, subject to the right of
Shareholders' Representative to object to such claim all as provided in the
Escrow Agreement. Buyer acknowledges that, except for claims for Losses under
Section 8.1 of this Agreement, Buyer's sole source for recovery of any Losses
shall be from the Escrow Amount.
8.9 SHAREHOLDERS' REPRESENTATIVE. For purposes of notice
requirements under this Article VIII, the Shareholders hereby appoint Xxxxxxx
Xxxxx and Xxxxx X. Xxxxxx (the "SHAREHOLDERS' REPRESENTATIVE") to serve as their
agent and attorney-in-fact with full power and authority (including power of
substitution), in the name of and for and on behalf of each of the Shareholders,
or in their own names as Shareholders' Representative, to take all actions
required or permitted under this Agreement, including the giving and receiving
of all service of process, reports, notices and consents and the signing of all
certificates, notices, instructions and other documents and the making of all
determinations thereunder. Action by the Shareholders'
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Representative shall require action of both Xxxxxxx Xxxxx and Xxxxx X. Xxxxxx.
In the event Xxxxxxx Xxxxx dies, becomes incapacitated or is otherwise unable to
serve as a member of the Shareholders' Representative, his successor shall be
appointed by Xxxxx Holdings, LLC. In the event Xxxxx X. Xxxxxx dies, becomes
incapacitated or is otherwise unable to serve as a member of the Shareholders'
Representative, his successor shall be Xxxxxxx X. Xxxxxx. The authority
conferred by this Section 8.9 shall be deemed an agency coupled with an
interest, and all authority conferred hereby is irrevocable and not subject to
termination by any of the Shareholders, or by operation of law, whether by the
death or incapacity of any of the Shareholders, or the occurrence of any other
event. If any of the Shareholders should die or become incapacitated, or if any
other such event should occur, any action taken by the Shareholders'
Representative shall be as valid as if such death or incapacity, termination or
other event had not occurred regardless or whether or not the Shareholders'
Representative, the Company, Buyer or any of the Shareholders shall have
received notice of such death, incapacity, termination or other event. Any
notice given to the Shareholders' Representative under this Agreement shall
constitute effective notice to the Shareholders, and Buyer may rely on any
notice, consent, election or other communication received from the Shareholders'
Representative as if such notice, consent, election or other communication had
been received from each of the Shareholders. Buyer shall not be liable to the
Shareholders for any action taken or omitted to be taken by the Shareholders'
Representative under this Agreement or in connection therewith.
ARTICLE IX
TERMINATION OF AGREEMENT
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9.1 TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated at any time prior to the Closing
Date:
(a) by mutual written consent of Buyer and the Company;
(b) by Buyer or the Company, upon written notice to the other
party, if the transactions contemplated by this Agreement shall not have been
consummated on or prior to September 30, 2000, unless such failure of
consummation shall be due to the failure of the party seeking such termination
to perform or observe in all material respects the covenants and agreements of
this Agreement to be performed or observed by such party or, in the case of the
Company, the Shareholders;
(c) by Buyer or the Company, upon written notice to the other
party, if a Governmental Authority of competent jurisdiction shall have issued
an Order enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and such Order shall have become final and
non-appealable; PROVIDED, HOWEVER, that the party seeking to terminate this
Agreement pursuant to this clause (c) has used its reasonable best efforts to
remove such Order; or
(d) by Buyer or the Company, if any condition to such party's
obligation (and, in the case of the Company, obligations of the Shareholders) to
consummate the transactions contemplated by this Agreement has not been
satisfied as of the Closing Date or if satisfaction of such condition becomes
impossible (other than through the failure of such party to comply
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with its or his obligations under this Agreement) and such party has not waived
such condition on or before the Closing Date.
9.2 EFFECT OF TERMINATION. The termination of this Agreement
shall be effected by delivery by the party terminating the Agreement to the
other party of written notice of such termination. In the event of termination
of this Agreement pursuant to Section 9.1, no party shall have any liability or
any further obligation to any other party, except as provided in this Section
9.2 and except that nothing in this Section 9.2 shall release, or be construed
as releasing, any party to this Agreement from any liability or damage for any
breach of this Agreement or failure to perform under this Agreement. The
obligations of the parties to this Agreement under Sections 6.5, 11.9, 11.12 and
11.13 shall survive any termination of this Agreement.
ARTICLE X
DEFINITIONS
-----------
As used in this Agreement the following terms shall have the
meanings set forth below:
"Accounting Firm" has the meaning set forth in Section 1.3(b).
"Action" means any action, suit, or legal, administrative or
arbitral proceeding or investigation before or by any Governmental Authority.
"Affiliate" means, with respect to any Person, any other
Person who (i) directly or indirectly, controls or is controlled by that Person,
or is under common control with that Person, (ii) is an officer, director or
employee of that Person, (iii) is a partner, stockholder or other Person
holding, directly or indirectly, an interest in that Person, or (iv) is an
entity in which that Person is a director, officer, employee, partner or
stockholder. For the purposes of this definition, "control" (including, with
correlative meaning, the terms "controlled by" and "under common control with"),
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Percentage" has the meaning set forth in Section
8.6(a).
"Audited Financial Statements" has the meaning set forth in
Section 4.7(a).
"Balance Sheets" has the meaning set forth in Section 4.7(a).
"Budget" has the meaning set forth in Section 4.31.
"Buyer" has the meaning set forth in the preamble to this
Agreement.
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"Business" means (i) the manufacture and sale of plastic
conduits for fiberoptic cables, (ii) the manufacture and sale of precision
components for aerospace fuel systems, (iii) the manufacture and sale of tooling
components for machine manufacturers, (iv) the manufacture of extrusion tooling
for Pyramid and (v) the manufacture and sale of radio frequency distributing and
combining electrical units for the cable television industry.
"Buyer Indemnified Parties" has the meaning set forth in
Section 8.1.
"Claimant" has the meaning set forth in Section 8.4.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986 and all
regulations promulgated thereunder, as the same may be amended from time to
time.
"Consent" means any consent, approval, license or
authorization of, notice to, or designation, registration, declaration or filing
with, any Person.
"Contract" means any contract, agreement, commitment,
undertaking or arrangement (whether oral or written) to which a Person is a
party or by which a Person or its assets is bound.
"Current Period" shall mean (i) any taxable year or other
period ending on or before the Closing Date for which a Tax Return is not
required to be filed on or before the Closing Date and (ii) in the case of a
taxable year or other period beginning before and ending after the Closing Date,
that portion of such taxable year or other period that ends on and includes the
Closing Date.
"Current Period Tax" means the total Tax due for a Current
Period. Any Tax attributable to the entire taxable year or other period
described in clause (ii) of the definition of Current Period shall be deemed to
be a Current Period Tax only to the extent of the amount of such Tax that would
have been incurred if the taxable year or other period had ended on the Closing
Date, with the basis for such Tax being determined (i) in the case of real and
personal property Taxes, intangible Taxes, ad valorem Taxes, and the like, by
allocating the Tax on a daily basis, and (ii) in the case of all other Taxes for
such periods, by closing the books and records as of the Closing Date.
"Deductible" has the meaning set forth in Section 8.6.
"Employee Plans" has the meaning set forth in Section 4.18(a).
"Environmental Law" means any Law which regulates or controls
pollution, contamination, or the condition of or a Release to groundwater,
surface water, soil, sediment or air.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" has the meaning set forth in Section 1.2(b).
"Escrow Agreement" has the meaning set forth in Section
1.2(b).
"Escrow Amount" has the meaning set forth in Section 1.2(b).
"Financial Statements" has the meaning set forth in Section
4.7(a).
"GAAP" means generally accepted accounting principles in the
United States, consistently applied.
"Governmental Authority" means any domestic or foreign
national, state, multi-state, municipal or other local government, any
subdivision, agency, instrumentality, department, board, commission or authority
thereof, or any quasi-governmental or private body exercising any regulatory or
taxing authority thereunder or any federal, state, local or foreign court,
tribunal or arbitrator.
"Hazardous Substance" means any substance (i) which is or has
been defined or identified as a hazardous waste, hazardous substance, pollutant
or contaminant under any Environmental Law; (ii) petroleum or any
petroleum-containing substance or (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mastagenic, reactive or
otherwise hazardous.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended and the rules and regulations promulgated thereunder.
"Indebtedness" of the Company means all obligations of the
Company and its Subsidiaries (i) for borrowed money, (ii) evidenced by notes,
bonds, debentures or similar instruments, (iii) for the deferred purchase price
of goods or services (other than trade payables or accruals incurred in the
ordinary course of business), (iv) under capital leases and (v) in the nature of
guarantees of the obligations described in clauses (i) through (iv) above.
"Indemnified Party" has the meaning set forth in Section
8.5(a).
"Indemnifying Party" has the meaning set forth in Section
8.5(a).
"Indemnitor" has the meaning set forth in Section 8.4.
"Intellectual Property" has the meaning set forth in Section
4.16(a).
"Interim Company Financial Statements" has the meaning set
forth in Section 4.7(a).
"IRS" means the Internal Revenue Service.
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"Investment" means any equity investment or interest, directly
or indirectly, in any Person.
"Knowledge of the Company", including the terms "KNOW",
"KNOWN" and other derivatives thereof, means the knowledge of Xxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxx and Xxxxxx X. Xxxxx, after reasonable inquiry
of the Company's officers, supervisory employees or outside professional
advisors having responsibility for relevant matters and the actual Knowledge,
without independent investigation, of the other Shareholders of the Company.
"Laws" means any law, statute, rule, code, regulation,
ordinance or other legally enforceable requirement of any Governmental
Authority.
"Lien" means any security interest, mortgage, pledge,
encumbrance, lien, charge, adverse claim or restriction of any kind, including,
but not limited to, any restriction on the use, voting, transfer, receipt of
income or other exercise of any attributes of ownership.
"Losses" has the meaning set forth in Section 8.1.
"XxxXxxxxx Xxxxx" has the meaning set forth in Section 1.2.
"Material Adverse Effect", with respect to financial matters,
an item will be deemed to have a Material Adverse Effect if it reduces, or
reasonably can be expected to reduce, the net worth or earnings (for the
following 12 months) of the Company by more than $500,000. Buyer acknowledges
that if Buyer does not approve the Ameritech contract in its current form, the
loss by the Company of the Ameritech contract shall not be deemed to be a
Material Adverse Effect.
"Net Worth" has the meaning set forth in Section 1.3(a).
"Net Worth Statement" has the meaning set forth in Section
1.3(a).
"Option" means any option, warrant, call, convertible or
exchangeable security, subscription, claim, unsatisfied preemptive right,
commitment, other agreement or right of similar nature.
"Order" means any order, judgment, injunction, award, decree
or writ of any Governmental Authority.
"Permits" has the meaning set forth in Section 4.17.
"Person" or "Persons" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other entity or
Governmental Authority.
"Post-Employment Benefits" has the meaning set forth in
Section 4.18(k).
"Predecessor" has the meaning set forth in Section 4.18(b).
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"Purchase Price" has the meaning set forth in Section 1.2.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including the abandonment or discarding of
barrels, containers and other closed receptacles containing any Hazardous
Substance).
"Shareholder Indemnified Parties" has the meaning set forth in
Section 8.3.
"Shareholders' Representative" has the meaning set forth in
Section 8.9.
"Shares" has the meaning set forth in the Recitals this
Agreement.
"Straddle Tax Return" has the meaning set forth in Section
6.9(d).
"Subsidiary" means with respect to any specified Person, any
other Person (a) whose board of directors or similar governing body, or a
majority thereof, may be directly or indirectly elected or appointed by such
specified Person, (b) whose management decisions and corporate actions are
directly or indirectly subject to the present control of such specified Person,
or (c) whose voting securities are more than 50% owned, directly or indirectly,
by such specified Person.
"Tax" or "Taxes" means any and all taxes based on or measured
by income and any other tax whatsoever (whether federal, state, local or
foreign), including, without limitation, gross receipts, profits, sales, use,
occupation, value added, ad valorem, transfer, franchise, withholding, payroll,
employment, excise, or property taxes, together with any interest, penalties or
additions to tax imposed with respect thereto.
"Taxing Authority" means a Governmental Authority exercising
taxing authority including, without limitation, the IRS.
"Tax Returns" means returns, reports, statements,
certificates, schedules, forms and other documents required to be filed with or
provided to any Taxing Authority.
"Third Person Claim" has the meaning set forth in Section
8.5(a).
"VisionTeq" has the meaning set forth in Section 2.2(h).
"1999 Balance Sheet" has the meaning set forth in Section
4.18(b).
ARTICLE XI
MISCELLANEOUS
-------------
11.1 FURTHER ASSURANCES. After the Closing, the Shareholders
shall, from time to time, at Buyer's request and without further cost or expense
to Buyer or the Company, prepare, execute and deliver to Buyer such further
instruments and take such further action as Buyer may
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39
reasonably request so as more effectively to sell, transfer, assign and deliver
the Shares to Buyer or otherwise to consummate the transactions contemplated by
this Agreement; PROVIDED, HOWEVER, that if such cooperation requires legal or
accounting assistance, Buyer shall reimburse the Shareholders for any legal or
accounting fees reasonably incurred in connection with such cooperation.
11.2 NOTICES. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon personal delivery, telecopy or other method
of facsimile transmission, or on delivery after being sent by recognized
overnight delivery service, when delivered and addressed to the following
addresses:
(a) if to Buyer, to:
The Xxxxxx & Sessions Co.
00000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention:
Facsimile: (000) 000-0000
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
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40
(b) if to Company, to:
Pyramid Industries, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx, Xxxxxxxxxxxx 00000
Attention:
Facsimile:
with a copy to:
XxxXxxxxx Xxxxx Xxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
also with a copy to:
Xxxxxxxx Xxxxxxxxx Professional Corporation
One Oxford Centre, 20th Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Muracca
Facsimile: (000) 000-0000
also with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile: (000) 000-0000
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(c) if to the Shareholders, to the Shareholders'
Representative:
Xxxxxxx Xxxxx
0000 Xxxxx Xxxxx Xxxxxx
Xxx. # 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile: (000) 000-0000
and
Xxxxx X. Xxxxxx
0000 Xxxx Xxxx
Xxxx, XX 00000
Facsimile:
with a copy to:
XxxXxxxxx Xxxxx Xxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
also with a copy to:
Xxxxxxxx Xxxxxxxxx Professional Corporation
One Oxford Centre, 20th Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Muracca
Facsimile: (000) 000-0000
PROVIDED, HOWEVER, that if any party shall have designated a different address
by notice to the other, then to the last address so designated.
11.3 BINDING EFFECT; ASSIGNMENT. This Agreement and the rights
and duties under this Agreement shall be binding upon and inure to the benefit
of the successors and permitted assigns of each of the parties to this
Agreement. Except for the assignment by Buyer of this Agreement and all or any
of its rights and obligations under this Agreement (a) before or
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42
after the Closing Date, to its lenders and (b) after the Closing Date, to (i)
any of its Affiliates or (ii) any Person who acquires (whether in a single
transaction or a series of transactions and whether by operation of law or
otherwise) all or substantially all of the assets of Buyer or at least a
majority of the outstanding capital stock of Buyer (any of which assignments may
be made without the consent of the Shareholders), no party shall assign or
delegate this Agreement or any rights or obligations under this Agreement
without the prior written consent of the other parties.
11.4 ENTIRE AGREEMENT. This Agreement and the Exhibits and
Schedules set forth the entire understanding of the parties to this Agreement
and supersede all prior agreements, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any party or any
officer, employee, shareholder or representative of any party to this Agreement.
11.5 GOVERNING LAW; CONSTRUCTION. This Agreement shall be
construed and enforced in accordance with and governed by the internal
substantive laws of the Commonwealth of Pennsylvania without giving effect to
the principles of conflicts of law thereof. The headings of the Articles and
Sections of this Agreement and in the Schedules and Exhibits to this Agreement
are inserted for convenience of reference only and shall not be used in
interpreting this Agreement. Unless specifically stated otherwise, references to
Articles, Sections, Exhibits and Schedules refer to the Articles, Sections,
Exhibits and Schedules to this Agreement.
11.6 NO THIRD PARTY RIGHTS. Nothing in this Agreement
expressed or implied is intended or shall be construed to confer upon or give to
any Person, other than the parties to this Agreement, any rights or remedies
under or by reason of this Agreement.
11.7 AMENDMENT. This Agreement may be amended only by an
instrument in writing duly executed by the parties to this Agreement, which
makes specific reference to this Agreement.
11.8 WAIVERS. Any waiver by any party of any breach of or
failure to comply with any provision of this Agreement by any other party shall
be in writing and shall not be construed as, or constitute, a continuing waiver
of such provision, or a waiver of any other breach of, or failure to comply
with, any other provision of this Agreement.
11.9 FEES AND EXPENSES OF TRANSACTION. The Company shall pay
the fees, costs and expenses (up to $200,000) incurred after May 17, 2000 by the
Shareholders and the Company in connection with the negotiation of this
Agreement and directly related to the consummation of the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that such expenses will not
include the special bonus payments to Xxxx X. Xxxxxx. The Shareholders will
reimburse the Company for any such fees, costs and expenses in excess of
$200,000 incurred by the Shareholders and the Company. Buyer shall pay the fees,
costs and expenses incurred by Buyer in connection with the negotiation of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
11.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute a single instrument.
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11.11 SEVERABILITY. In case any provision of this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement will not be
affected or impaired thereby.
11.12 CONSENT TO JURISDICTION. Except to the extent prohibited
by applicable Law, the parties agree that any suit, action or other legal
proceeding arising our of this Agreement or the transactions contemplated by
this Agreement may be brought in the courts of record of the Commonwealth of
Pennsylvania and each party to this Agreement consents to the jurisdiction of
each such court in any such suit, action or proceeding.
11.13 ARBITRATION. (a) Any dispute arising out of or relating
to this Agreement or the breach, termination or validity thereof, shall be
finally settled by arbitration conducted expeditiously in accordance with the
American Arbitration Association Commercial Arbitration Rules by a sole
arbitrator selected by the parties to the dispute from the National or
Pittsburgh, PA panel of arbitrators. If the parties are unable to agree upon an
arbitrator within ten calendar days, each party shall select an arbitrator. The
two arbitrators selected shall select a third arbitrator and all decisions
thereafter shall be made by a majority of the arbitrators. The arbitration shall
be governed by the Untied States Arbitration Act. 9, U.S.C. Section 1-16, and
judgment upon the award rendered by the arbitrator(s) may be entered by any
court having jurisdiction thereof. The arbitrator(s) is not empowered to award
damages in excess of compensatory damages and each party hereby irrevocably
waives any damages in excess of compensatory damages.
(b) Arbitration proceedings shall be commenced by either the
Buyer or the Shareholders Representative by delivering to the other a written
notice requesting arbitration. Each party shall bear its own costs and expenses
in connection with the arbitration and all other costs, including the
arbitrator(s) fees and expenses shall be borne equally by the parties to
the dispute. Notwithstanding the foregoing, if the arbitrator(s) determines that
one party acted unreasonably and not in good faith, the arbitrator(s) shall have
authority to assess the costs and expenses of the arbitration, including the
arbitrator(s) fee and reasonable attorneys' fees, against that
party. Any arbitration hearing shall be held in Pittsburgh, PA, unless the
parties to the dispute agree otherwise. Any award rendered by arbitration shall
be final and binding on the parties, and judgment thereon may be entered in any
court of competent jurisdiction. Notwithstanding any arbitration rules to the
contrary, the award of the arbitrator(s) must be made no later than three months
following the date on which the arbitrator(s) is appointed, unless the issue is
the subject of litigation brought by a third party and the arbitrator(s) deems
it appropriate to defer its award until the litigation is resolved.
[SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties hereto have executed or caused
this Agreement to be executed by their duly authorized officers as of the day
and year first above written.
BUYER:
-----
THE XXXXXX & SESSIONS CO.
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Name: Xxxxx X. Xxxx
Title: Executive V.P. and Chief Financial
Officer
COMPANY:
-------
PYRAMID INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and CEO
SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxx
------------------------------------------
Xxxxxx Xxxxx
/s/ Xxxx Xxxxx
------------------------------------------
Xxxx Xxxxx
45
XXXXX HOLDINGS, LLC
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Name: Xxxxxxx Xxxxx
Title:
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Name: Xxxxxxx Xxxxx
Title:
/s/ Xxxxxx Xxxxx
------------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxxx X. Xxxxx
------------------------------------------
Xxxxxxx Xxxxxx Xxxxx
/s/ Xxxxx Xxxxx
------------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
------------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxx X. Xxxxxx
------------------------------------------
Xxxx X. Xxxxxx
XXXXX XXXXXXXXX TRUST
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Xxxxxxx Xxxxxxxx, Xx.
------------------------------------------
Xxxxxxx Xxxxxxxx, Xx.
/s/ Xxxxxxx Xxxxx
------------------------------------------
Xxxxxxx Xxxxx
46
/s/ Xxxx Xxxxx
------------------------------------------
Xxxx Xxxxx
/s/ Xxxxxx Xxxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxxx
/s/ Xxxx Xxxxxxxxx
------------------------------------------
Xxxx Xxxxxxxxx
/s/ Xxxxxx X. Xxxxx
------------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
